... One of the government's key recommendations is for Americans to consume three or more servings of whole-grain products a day. Two slices of Panera's new bread will account for half of a day's requirements set forth in that advisory. Panera has long offered breads made with whole grains. The government's focus on whole-grain foods comes at an opportune time for bread makers, which fell out of favor with the popularity of low-carb programs like the Atkins diet.

In short, the death of fad dieting has fueled Panera's growth the way spinach did Popeye's. The company has been blowing same store sales estimates and delivering one impressive quarter after the next. Today, Panera will show us if it can do it again.

On the plus side, even the stock is miles away from "bargain-status," we like Panera's 13% operating margins and its taut connection with consumers. Moreover, the company carries zero debt, bankrolls its expansion initiatives with operational cash flow, and often gets called "the next Starbuck's."

Which brings us to Panera's potential doom. The stock could be due for anguish if Starbuck's decides it wants to narrow the gap further and expand aggressively into Panera's niche.

It could happen, but probably not in the immediate future -- Starbucks (which we rate a strong buy) is too busy trying to forge entertainment deals, carve out its music offerings, and take China by storm.

In the meantime, Panera should continue to make some serious dough, all puns aside.

PNRA 1-yr Chart

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